AM Best

DECEMBER 28, 2010 02:00 PM (EST)

A.M. Best Affirms Ratings of The Progressive Corporation and Its Subsidiaries

 Frederick DeLeon
Senior Financial Analyst
(908) 439-2200, ext. 5175

Gary Davis
Assistant Vice President
(908) 439-2200, ext. 5665
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK, N.J. - DECEMBER 28, 2010 02:00 PM (EST)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa" of the Progressive Agency Pool, Progressive Direct Pool and Progressive Commercial Auto Group (collectively known as Progressive) and their respective members. A.M. Best also has affirmed the FSR of A (Excellent) and ICR of "a+" of National Continental Insurance Company. Additionally, A.M. Best has affirmed the ICR of "a" and all debt ratings of the parent holding company, The Progressive Corporation [NYSE: PGR]. The outlook for all ratings is stable. All companies are headquartered in Mayfield Village, OH. (See below for a detailed listing of the companies and ratings.)

The ratings reflect Progressive's solid capitalization, strong operating performance and sustainable competitive advantages. Progressive's capitalization has benefitted from sustained underwriting profitability and a rebound in its investment portfolio since 2008. Progressive continues to benefit from an innovative management team, brand name recognition, a multiple channel distribution platform and innovative underwriting and claims handling technology. In addition, Progressive's direct operations have exhibited favorable growth, reflective of improved brand recognition.

These positive rating factors are partially offset by Progressive's high underwriting leverage relative to industry averages. In addition, although financial leverage at the holding company improved in 2010, financial leverage remains higher than 2006 and prior years. However, Progressive has historically operated with elevated underwriting leverage, and debt-to-adjusted capitalization remains within A.M. Best's expectations.

The FSR of A+ (Superior) and ICRs of "aa" have been affirmed for the Progressive Agency Pool and its following members:

-Progressive Casualty Insurance Company

-Progressive Northern Insurance Company

-Progressive Northwestern Insurance Company

-Progressive Specialty Insurance Company

-Progressive Preferred Insurance Company

-Progressive Classic Insurance Company

-Progressive American Insurance Company

-Progressive Gulf Insurance Company

-Progressive Bayside Insurance Company

-Progressive Mountain Insurance Company

-Progressive Southeastern Insurance Company

-Progressive Hawaii Insurance Corp.

-Progressive Michigan Insurance Company

-Progressive Security Insurance Company

-Progressive West Insurance Company

-Drive New Jersey Insurance Company

-Progressive County Mutual Insurance Company

The FSR of A+ (Superior) and ICRs of "aa" have been affirmed for the Progressive Direct Pool and its following members:

-Progressive Direct Insurance Company

-Progressive Marathon Insurance Company

-Progressive Max Insurance Company

-Progressive Advanced Insurance Company

-Progressive Universal Insurance Company

-Progressive Premier Insurance Company of Illinois

-Progressive Paloverde Insurance Company

-Mountain Laurel Assurance Company

-Progressive Choice Insurance Company

-Progressive Select Insurance Company

-Progressive Freedom Insurance Company

-Progressive Garden State Insurance Company

The FSR of A+ (Superior) and ICRs of "aa" have been affirmed for the Progressive Commercial Auto Group and its following members:

-Artisan & Truckers Casualty Company

-Progressive Express Insurance Company

-United Financial Casualty Company

The following debt ratings have been affirmed:

The Progressive Corporation—

- "a" on $350 million 6.375% senior unsecured notes, due 2012

- "a" on $150 million 7.000% senior unsecured notes, due 2013

- "a" on $300 million 6.625% senior unsecured notes, due 2029

- "a" on $400 million 6.250% senior unsecured notes, due 2032

- "bbb+" on $1 billion 6.7% junior subordinated debentures, due 2067 (of which $777.1 million remains outstanding)

The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; "Catastrophe Analysis in A.M. Best Ratings"; "Natural Catastrophe Stress Test Methodology"; "Catastrophe Risk Management Incorporated Within the Rating Analysis"; "Equity Credit for Hybrid Securities"; and "A.M. Best's Ratings & the Treatment of Debt." Methodologies can be found at

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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